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China’s Economic Rise

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China’s Economic Rise

History, Trends, Challenges, and Implications for the United States

Congressional Research Service,

15 min read
10 take-aways
Audio & text

What's inside?

Understanding China is the key to understanding modern geopolitics and economics.

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Editorial Rating

7

Qualities

  • Analytical
  • Scientific
  • Overview

Recommendation

Any credible reading of the geopolitical terrain requires a fundamental understanding of China’s long-run dynamics. This report from Wayne M. Morrison of the US Congressional Research Service takes a wide-angle lens to China’s economy, its industrial policies, and its dependence on fixed investment and exports. Readers should note that humanitarian issues fall outside the scope of the report, although it addresses some political and social considerations and their impact on China’s economic well-being. For instance, China’s comparatively weak rule of law undermines property rights, contract rules and the fair allocation of credit. Moreover, a dearth of state-provided social benefits compels citizens to save rather than to consume. However, the report is careful to avoid editorializing and, instead, lets the data tell most of the story. getAbstract recommends this informative read to executives, policy makers and economists who want a research-based overview of China’s economy and its future.

Summary

A Historic Transition

China’s emergence as an economic heavyweight in the 21st century did not occur by chance. The impetus for a command-and-control economy collapsed with the death of Chairman Mao Zedong in 1976, paving the way for a spate of market-oriented reforms. Within three decades, those economic reforms had freed 500 million Chinese from extreme poverty.

Before the introduction of economic reforms, Maoist China’s singular vision was for a centrally planned, self-sufficient state. The government invested heavily in modernizing the country’s industrial sectors, but it kept foreign capital out and restricted international trade largely to the Soviet Union. The Chinese government’s claims of 6.7% average yearly growth between 1953 and 1978 are somewhat dubious, since independent analysis approximates that rate of annual expansion as being closer to 4.4%.

China’s nascent market policies were the brainchild of progressive leader Deng Xiaoping, who successfully introduced change gradually over many years. He withdrew price controls, eased protectionism in designated development zones and introduced entrepreneurship as a potential outlet for economic creativity...

About the Author

Wayne M. Morrison covers Asian trade and finance at the Congressional Research Service.

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